Real estate professionals are concerned about potential liability under the Texas Deceptive Trade Practices-Consumer Protection Act. The DTPA has penalties that are alarming to say the least: trebled damages for an “intentional” or “knowing” violation, damages for mental anguish, and even attorney’s fees and costs. Many plaintiff attorneys like alleging that a real estate professional has violated the DTPA in hopes of strong-arming a settlement early and for more money than is reasonable.
But did you know that the DTPA has a safety net? There is a “professional services exemption” under the DTPA, which applies to those in the real estate profession and can be your saving grace if you stay in that box and respect its boundaries.
The Boundaries of the DTPA
Section 17.49(c) of the DTPA exempts from liability “a claim for damages based upon rendering a professional service, the essence of which is the providing of advice, judgment, opinion, or similar professional skill.” Where some real estate professionals get into trouble is by offering advice and judgment, but straying from their vocation.
For example, a real estate professional who tells a client that it seems like the air conditioning system is functioning just fine is not staying in the DTPA’s safety net. This applies to all mechanical systems within a home or commercial structure. Remember not to give opinions as to the functionality of foundations, roofs, air conditioning systems, pool pumps, and the like.
When the DTPA Professional Services Exemption Doesn’t Apply
An express misrepresentation of a material fact cannot be protected by the professional services exemption, even if the misstatement is related directly to real estate advice. Likewise, a failure to disclose cannot enjoy this protection. Nor can any “unconscionable act” that takes advantage of another person fall within this broad protection.
Possibly the most common way in which real estate professionals stray from the protection of the professional services exemption is to give an opinion on the law. Although arguably you are “rendering a professional service, the essence of which is the providing of advice, judgment, opinion,” you are offering a legal opinion and not a real estate opinion. Providing a legal opinion when you are not an attorney is a common way real estate professionals venture out of DTPA protection, since the profession of real estate has many intersections with ordinances, regulations, tax law, building codes, environmental regulations, and other types of law.
There are wide protections under the professional services exemption, but those protections are not without limit. Do what you do best and enjoy it! Know the boundaries of your professional advice, and you will enjoy the law’s protection. Advising your client to consult another expert in another relevant discipline does not take away from your competency, but rather enhances your credibility.
How Texas REALTORS® Helped You Gain an Exception to the DTPA
Legislative efforts by Texas REALTORS® resulted in the Texas Legislature in 2011 amending the Texas Deceptive Trade Practices-Consumer Protection Act to clarify that real estate professionals fit within the professional-services exception to the DTPA. This is not to say you cannot be sued, but the basis for a suit is more defined and must constitute a deviation from providing professional advice, judgment, or opinion expected of the real estate profession.